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Oppenheimer Visits Whole Foods' New 365 Stores

Oppenheimer Visits Whole Foods' New 365 Stores - Whole Foods Market, Inc. NASDAQ:WFM

Whole Foods Market, Inc. WFM has seen its stock decline nearly 8 percent since the start of 2016. The bull versus bear debate has been described by one analyst as "fiercely divided," as the long-term impact of the company's new "365" concept stores are not yet known.

Checking In

In a research report published Tuesday, Oppenheimer's Food Grocery & Consumer Products analyst Rupesh Parikh detailed what he observed first hand across multiple 365 stores.

Parikh stated that traffic was "strong" and "consistent" at the store he visited in Silver Lake, California, to the point where parking remained in shortage. On the other hand, the store he visited in Lake Oswego, Oregon, was "much quieter," especially compared to a nearby Trader Joe's location.

Parikh also noted that a 365 store under construction in Bellevue, Washington, seemed "very well positioned," and the location "should do well." However, the store is in proximity to Whole Foods' core store and should "prove to be a true test to assess cannibalization."

"Overall, based on our visits, we continue to see the potential for the concept especially based on the Silver Lake location and the Bellevue WA real estate site," the analyst wrote. "We very much expect this concept to continue to evolve further over time, as it is unlikely to be optimized in the first go around."

The Takeaway

Bottom line, Parikh concluded that his three-store checks isn't large enough of a sample size to reach any conclusion, but the stores could broaden Whole Foods' market share opportunity.

Shares of Whole Foods remain Outperform rated with an unchanged $38 price target.

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DateFirmActionFromTo
Jul 2016Deutsche BankMaintainsHold
Jul 2016Goldman SachsDowngradesBuySell
Jul 2016MacquarieUpgradesNeutralOutperform

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